Oil soars as sanctions bite and the conflict intensifies
Oil prices were surging once more as the conflict in Ukraine intensifies, the West continued to impose severe sanctions and companies turned their backs on what was becoming an increasingly isolated Russia. We were starting to see what impact these sanctions could have on Russian oil exports and the challenges they posed and that was driving the price higher.
The oil rally seriously accelerated Tuesday, breezing past USD 100 and gathering momentum along the way. That despite the US once again leading discussions around a coordinated release of oil reserves of around 60-70 million barrels, which was clearly doing little to calm nerves. We saw an underwhelmed reaction when this happened in November as well and that was before Russia invaded Ukraine.
Safe-haven gold continued to move higher
Gold rallied once again in risk-averse trade as Russia’s assault on Ukraine intensified. Sentiment in the markets had been deteriorating throughout the session and the price of gold rose alongside that. It also came as the price of oil soared again Tuesday, adding to the inflationary pressures being experienced around the world.
The safe haven and inflation hedge appeal drove plenty of support for the gold price, which was back above USD 1,930; it could have its sights set on USD 1,950 in the near-term. Beyond this, USD 2,000 suddenly looked very achievable again as nothing we were seeing in Ukraine, or in negotiations at the border, gave the impression that the end was in sight, sadly.